Some Like it Hot
As the EUR/USD currency pair heats up it will be looking to continue its march higher, and is currently testing the psychological 1.4900 level. Turning to our daily chart we can see the pair has been in an uptrend for eleven months with the low beginning established on June 2010 at a low 1.1875.
As we look for a directional bias this week for EUR/USD pair, it’s important to acknowledge the events coming up on our Economic Calendar. On Tuesday at 9:00 GMT, The Euro Zone will release their current PPI (Producer Price Index) numbers. PPI is a strong indication of inflation in an economy measuring the change in prices of consumer goods. As money follows yield, this will be our first clue into the potential for interest rate hikes for the Euro Zone in the month of May. As well, this news will give us fresh clues into the continuation of our now 3000 plus pip uptrend.
Taking a look at our 4Hr we can see the EUR/USD attempting and failing to break through the 1.4900 level at the conclusion of last week. Support is held strong with three tests beginning with our low established on April 19th at 1.4269. If our short term support fails longer term resistance can be found near 1.4465.
Due to the solid psychological resistance at 1.4900 on the EUR/USD, my preference is to wait and buy a break if price continues printing higher highs. If price breaks resistance this will become first support and can be used for placing stops. Targeting 1.5075 or higher will give us a 1:2 Risk Reward ratio or better.
Alternative scenarios include waiting for price to break below short term support at 1.4765 and wait to buy near 1.4465.
Walker England contributes to the Instructor Trading Tips articles. To receive more timely notifications on his reports, email firstname.lastname@example.org to be added to the distribution list.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.